Brief Fact Summary.
Plaintiff and defendant are getting divorced and the plaintiff is alleging that the defendant’s increase in value of his dealerships is community income.
Synopsis of Rule of Law.
Increase in value of a spouse's separate business that attributes to the spouse’s capital investment is considered spouse's separate property.
Plaintiff Mrs. Gilmore and Defendant Mr. Gilmore were married. Defendant partially owned and worked at three automobile dealerships. During the six years of marriage to plaintiff, the value of his ownership in the dealerships increased. The trial court held that the increase in value was defendant's separate income. Plaintiff appealed.
Whether the increase in value of a spouse's separate business that attributes to the spouse’s capital investment is considered spouse's separate property.
Yes. The decision of the trial court is affirmed.
In regard to earnings, the rule is that where the husband is operating a business which is his separate property, income from such business is allocated to community or separate property in accordance with the extent to which it is allocable to the husband's efforts or his capital investment.View Full Point of Law
In this case, the value of the automobile dealerships was the result of market conditions, instead of a result of Mr. Gilmore’s skills or efforts. Similar to picking a stock, because the increase in value of defendant's ownership interests in the businesses was due to his capital investment and not his efforts or skills, that increase in value is separate property